U.S. AND E.C. ANTITRUST APPROACHES TO PATENT UNCERTAINTY

The European Commission's Technology Transfer stop up Exemption Report ("TTBE Report")1 exhibits another step in the continuing gradual approach of U.S. and European approaches to the relationship between antitrust and intellectual characteristic law. In the pre-1996 stop up exemption framework, intellectual property licensing arrangements in the European Communities were superviseed by extensive "black," "white," and "grey" lists of forbidden, permitted, and questionable license restrictions that had more in for the use of all with the "Nine No-No's" approach that dominated U antitrust thinking from the 1940's to the mid1970's than with the more economically based perspective showed in the 1988 U.S. Department of Justice Guidelines for International Operations2 or the 1995 DOJ-FTC Intellectual attribute Guidelines ("IP Guidelines")3 The 1996 Technology Transfer shut up Exemption ("TTBE") pared those lists down and, like its U counterpart, treated intellectual characteristic licensing agreements more favorably than in the past. The TTBE Report takes another large pace in the direction of the U approach, particularly by means of seeming to endorse one of the greatest in quantity fundamental concepts under the U IP Guidelines-that the relationship between sum of two units parties to a transaction is horizontal single if there would have been competition between those parties absent a license between them.4

Neither the U IP Guidelines nor the TTBE Report, however, deal adequately with an important difference between intellectual attribute and other forms of property: that the boundaries and flat the validity of intellectual peculiarity are often highly uncertain. This is a lock opener deficiency because, as the U IP Guidelines make clear, a lock opener antitrust concept-whether a relationship between sum of two units parties to a transaction is horizontal or vertical"-depends in many cases upon whether there would have been competition between the sum of two units parties absent a license between them. Whether there would have been like competition or not may, in turn round depend on the scope and validity of the patents be in possession ofed by one or both of the parties: if the object is narrower than the patent proprietor claims, the patent may not be infringed and competition could have flourished without a license; if the patent is infringed on the other hand is invalid, competition again does not require a license. Thus, if the aim or validity of the patents have a title toed by one or both of the parties is uncertain, then it may not be known-either by the agency of the parties at the time of the management or by the court at the time of hearing an antitrust challenge-whether the parties are horizontal competitors or not, and hence whether the leadership is lawful or not. in what manner should an antitrust authority treat a situation in which either it or the parties literally don't know, or didn't know at the relevant time?

Not including merger cases,6 of that kind situations have come before U courts and agencies more than a dozen times in the last scarcely any years,7 often in cases involving centurys of millions of dollars of mercantile relations Analyses of this issue to date have been les than comprehensive, however, and no single approach to dealing with this issue has secur a consensus. Part I of this article will provide a brief background upon E.G. competition law and its gradual approach with U.S. law. It will also explain on what account the laudable convergence of EG and U approaches to the antitrust/intellectual characteristic interface will force the Europeans, too, to stand over against this problem.

Part II will review the different approaches that U courts and competition authorities have used or might use to analyze agreements between companies whose ability to enter the lists with each other absent the agreement hangs on patents of undetermined validity and design and the problems and issues raised by the agency of each approach. Because the centrality of the "competition absent the license" issue is publicly a feature only of U law-the EG having sole hinted at it in a non-binding application of mind report and draft guidelines-this review will concentrate on U.S. cases.

Part III discusses important considerations in devising a sensibleapproach to of that kind cases, including the need to reward innovation, the take away froms of decisional rules that either under-deter anticompetitive direction or over-deter procompetitive conduct, and the ne for certainty in the application of relevant enforcement laws.

Finally, Part IV tenders concluding comments and notes a certain quantity of possible options for dealing with patent uncertainty.

I. BACKGROUND: THE gradual approach OF EUROPEAN COMMISSION AND U APPROACHES TO THE APPLICATION OF ANTITRUST TO INTELEECTUAL PROPERTY

From private practitioners and scholars8 to antitrust enforcement officials9 there is general consensus that the U and EG approaches to antitrust issues have been converging. It has been written that:

[T]he consistence of ... regulatory and policy disentanglements on both sides of the Atlantic, coupl with the expressly recognized goal of coordination and cooperation by means of authorities in both the EU and the United States, emphasizes the similarities between [the TTBE] and the IP Guidelines. Indeed, single may safely argue that that there generally exists a greater degree of tendency to meet in antitrust policy, regulation and enforcement than at any time before between the EU and the United States.10